Name: As more Virginians file for unemployment, state agency is two months from running out of money
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As more Virginians file for unemployment, state agency is two months from running out of money

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AdvertisementBy The Virginian-PilotJul 23, 2020 at 6:07 pmThe state agency responsible for sending unemployment benefits to the hundreds of thousands of Virginians that have found themselves out of work amid the coronavirus pandemic says it will run out of money within two months.Officials with the Virginia Employment Commission told reporters Thursday that it will be forced to borrow money from the federal government to continue making benefit payments, and that the state’s businesses, some of which have been crippled by the COVID-19 shutdowns, will be hit with higher taxes.Advertisement“Businesses that have been hardest hit by the pandemic and that have laid off and furloughed the most employees could face the highest tax increases,” said Joyce Fogg, spokeswoman for the Virginia Employment Commission. That’s because taxes on employers fill the trust fund, and those with higher turnover — like businesses that have had to lay off or furlough much of their workforce during the pandemic shutdowns — will owe more to help fund the unemployment benefits. And when businesses shut down and are no longer paying taxes, more of the burden shifts to the remaining businesses.The same thing happened during the last Great Recession. Taxes rose between 2010 and 2012 to cover shortfalls in the fund as more people filed for unemployment. The trust fund had a $140 million deficit in 2010, and by 2012 employers were paying about $236 a year per employee in taxes to shore up the trust fund. As the economy recovered, the rates fell, and employers were most recently paying an average of $69.92 per employee.AdvertisementBy last year, the fund had amassed nearly $1.45 billion and was 83% solvent by the state’s standard. Yet, by June 30, the state had just $500 million left for unemployment compensation.After paying out $2.6 billion in state benefits so far, officials with the agency expect the trust fund to run a deficit of $750 million by year’s end.The agency said some businesses could be facing tax bills of about $550 per employee as the tax rate rises. That could also be on top of federal unemployment taxes that amount to $420 per worker. Virginian businesses have been eligible for a 90% discount on that federal tax, but if Virginia borrows money from the U.S. government and can’t pay it back according to the government’s terms, it could affect that discount.The Virginia Employment Commission has been criticized for delays in getting unemployment benefits into the hands of out-of-work residents, with being made by workers to state lawmakers in a single month. The agency, though, has pointed to the overwhelming number of cases they’re handling: essentially six years worth of claims since mid-March.The news about the trust fund’s solvency came as the state reported that another 37,946 people had filed a first-time claim for unemployment in the week ending July 18, an increase of 5,654 from the prior week. It’s the third week in a row that the number has risen. It was the highest number of initial claims — filed when a person first loses his or her job — since late May. The number of continued claims — out-of-work Virginians continuing to receive weekly benefit payments — has dropped in the last three weeks to 357,098 as of last Saturday.Since the pandemic began to take hold in Virginia in mid-March, more than 1 million initial claims for unemployment have been filed by workers who have lost their jobs.WeekdaysBusiness news for the Hampton Roads region &gt; Nationwide, the U.S. Department of Labor reported that 1.4 million people filed initial unemployment claims last week, the first weekly increase since March, according to the Associated Press.The rise in filings come as an extra $600 a week in unemployment benefits from the federal government is set to expire on July 25, unless Congress votes to extend it or enact a different benefit to respond to the pandemic.AdvertisementRobert McNab, an economist with Old Dominion University, said that if the federal government’s additional weekly unemployment benefits are allowed to lapse after this week and help isn’t provided to states to cover benefit deficits, it will only exacerbate the recession and impede any recovery.“We appear to be making almost every wrong choice in terms of policy at the national level, and that has trickle-down effects to states and localities,” he said.“We have known this problem was coming and we have known it for months, and yet here we stand at the end of July wondering how to solve the problem that we’ve seen coming at us.”Some, especially business owners, have said the $600 extra in weekly federal unemployment benefits has kept many people from returning to work because the benefits exceed their pay. McNab, though, said that if the benefit expires, there’s little reason to think there will be that many jobs for people to fill, especially as consumers cut back again on doing things outside of their homes as cases have risen. Job posting data in Hampton Roads had dropped to May levels after rising in June, he said. He said he personally believes the benefit should be extended in the short term and only lowered based on a state’s unemployment dropping to a certain level.The Virginia Employment Commission has organized its first virtual job fair on July 28 from 1-2 p.m. for military veterans and 2-5 p.m. for the general public. More than 150 employers that have immediate openings are expected to attend and more than 1,000 job-seekers were already registered as of Thursday. For more information on the job fair, visit . Advertisement

AdvertisementBy The Virginian-PilotJul 23, 2020 at 6:07 pmThe state agency responsible for sending unemployment benefits to the hundreds of thousands of Virginians that have found themselves out of work amid the coronavirus pandemic says it will run out of money within two months.Officials with the Virginia Employment Commission told reporters Thursday that it will be forced to borrow money from the federal government to continue making benefit payments, and that the state’s businesses, some of which have been crippled by the COVID-19 shutdowns, will be hit with higher...

As more Virginians file for unemployment, state agency is two months from running out of money

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